It’s very important to know the rules of the credit card game because if you don’t, you could quickly find yourself in financial trouble and in need of credit card help.
The following tips will help new and experienced credit card users avoid unwelcome credit card debt.
DON’T accept a credit card without reading the terms. Choosing a credit card involves more than liking the issuer’s catchy commercial. Instead, evaluate the credit card based on the fees, interest rates, and rewards—if it’s a rewards credit card. Moreover, compare credit card terms from different lenders to ensure that you’re getting the best deal.
DON’T use your credit card to make everyday purchases. Items like food, clothing and gas shouldn’t be purchased with a credit card.Using your credit card as a substitute for cash is a habit that can quickly lead to a situation requiring debt relief. For ordinary everyday purchases, leave your credit card in your wallet and use cash or a debit card instead.
DON’T stick to making minimum payments. Making only the minimum payment each month increases the payoff time and the amount of interest you’ll end up paying – which in some cases can be debilitating. For instance, if you have a credit card balance of $1,000 with an 18% interest rate, and you pay only the minimum monthly payment, it will take you 9.4 YEARS to pay off this debt – and you’ll have paid $923 in interest. You will be paying back nearly twice the amount that you borrowed and it’ll take almost a decade.
DON’T use your credit card to buy items you can’t afford. Living a borrowed lifestyle is the quickest way to get into debt or even go into bankruptcy. If you can’t afford a purchase today, chances are you won’t be able to afford it tomorrow, or even next month.
DON’T close a credit card account without knowing how your credit will be affected. There are times when closing a credit card can hurt your credit score. Avoid closing cards that still have a balance or those that make up a significant amount of your credit history.
DO use your credit card responsibly. Recognize which items you actually need (a necessity) or simply want (an impulse purchase). Avoid the “wants” as much as possible.
DO let your creditor know in advance if you can’t make your monthly payment on time. Foregoing your credit card payment is never a good thing, but many creditors will offer you some credit card help if you notify them before you miss your payment. Call your creditor, explain the situation, and ask that any late fees be waived. Missed payments may still adversely affect your credit score.
DO stay within 30% of your credit limit. A sizeable percentage of your credit score factors in the amount of debt you have versus how much you could borrow on your cards. Keeping your balances low helps maintain a good credit score.
DO negotiate a lower interest rate – especially if your current rate is higher than offers received from other lenders. The higher the rate, the more you’ll pay for carrying a balance on your credit card. Periodically evaluate the interest rate on your credit card to be sure you’re getting the best deal possible.
DO review your statement each month. Don’t take for granted that everything on your credit card statement is accurate. Be sure that your last payment was applied correctly, you were charged the right amount for all of your purchases, and there were no unauthorized transactions. Dispute any errors with your credit card issuer within 60 days and report unauthorized charges immediately.
For more credit card help, or to talk to someone about how to pay off credit cards, contact one of our consultants at Beyond Finance. Call us today at 1-800-495-4069.